Gaza war turns Palestine into a potential Middle Eastern lightning rod.

By James M. Dorsey

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The Gaza war has turned Palestine into a lightning rod for mounting frustration and discontent in Arab autocracies such as Egypt, Jordan, Tunisia, Algeria, and Morocco.

Concerned that the war could mobilise segments of civil society, Saudi Arabia and the United Arab Emirates where any form of public protest is banned, have cracked down on expressions of solidarity with Gaza, including the sporting of keffiyehs, the chequered scarf that symbolises Palestinian nationalism.

In December, pro-Palestinian activists at the COP28 climate summit in Dubai faced unprecedented restrictions including prohibitions on flags and explicitly naming a country in news conferences, and scrutiny of their slogans.

Pro-Palestinian demonstrators call for a ceasefire in the Israel-Hamas war during the COP28 UN Climate Summit, in Dubai, United Arab Emirates, on December 3, 2023. Credit: AP Photo/Peter Dejong

In January, the Red Sea Film Festival in Jeddah, the biggest film event in the Middle East and North Africa, welcomed Palestinian cinema but banned the donning by attendees of keffiyehs.

Like in the second half of the 20^th century, protests in the Middle East beyond the Gulf in support of Palestinians and against Israel’s assault on Gaza are as much about the war as they are about anger at governments’ faltering economic performance.

Nowhere is the anger more acute than in Egypt where the country’s currency slipped this week sharply against the US dollar after the central bank raised its main interest rate by 600 base points to 27.75 per cent and said it would allow the currency’s exchange rate to be set by market forces. It was the Egyptian pound’s fifth devaluation in two years.

Hard hit by the wars in Gaza and Ukraine, the government expected the measures to stymie Egypt’s 31 per cent inflation rate, attract desperately needed foreign investment, and tackle its staggering shortage of foreign currency.

Egypt has suffered from a loss of tourism, significantly reduced Suez Canal shipping revenues because of Yemeni Houthi attacks on commercial vessels in the Red Sea, rising wheat prices in the wake of the Ukraine war, and economic mismanagement, including investment in megaprojects such as a US$58 billion new desert capital, and granting military-owned enterprises preferential treatment and an oversized stake in the economy.

A view from the under-construction Iconic Tower skyscraper, showing ongoing work in the business and finance district of Egypt's New Administrative Capital on August 3, 2021. Credit: Khaled Desouki / AFP / Getty

The floating of the pound secured an expansion from US$3 billion to US$8 billion of Egypt’s International Monetary Fund bailout loan, making the North African country one of the IMF’s highest borrowers.

The IMF agreement cemented a recent deal with the United Arab Emirates to develop a prime stretch of Egypt’s Mediterranean coast with a US$ 35 billion investment over the next two months.

Egypt will retain a 35 per cent stake in the development with the Talaat Moustafa Group, a construction conglomerate involved in building the new capital as one of the beneficiaries.

While not officially announced, well-placed sources said It was understood that the deal was contingent on Egypt reaching an agreement with the IMF.

Gulf states, including the UAE, have in recent years backed away from pumping funds into black holes. Instead, they increasingly link investments in countries like Egypt and Pakistan to economic reforms and prospects for a return on investment.

The UAE pioneered the approach when it based a government minister in Cairo immediately after general-turned-president Abdel Fattah Al-Sisi’s UAE-backed coup that toppled Egypt’s first and only democratically elected president. The UAE official attempted to nudge Mr. Al-Sisi towards economic reform.

Egyptian President Abdel Fattah al-Sisi. Credit: KHALED DESOUKI/AFP/AFP/Getty Images

“We work with the International Monetary Fund and according to its rules. The days of unconditional assistance are over,” Saudi Finance Minister Mohammed al-Jadaan told an investment conference last year.

Last week, 45-year-old policeman Abdel-Gawad Muhammad al-Sahlamy was alone when he staged a one-man protest waving a Palestinian flag atop an advertisement billboard in the port city of Alexandria, but many Egyptians were likely to have been with him in spirit.

Many are angry that Egypt’s Refah border crossing into Gaza remains closed despite the images of thousands of Gazans dying and imminent famine. In October, the government sought to pre-empt potential protests by staging pro-Palestinian demonstrations of its own.

Mr. Al-Sisi believes that pro-Palestinian activists who were allowed to stage protests under former president Hosni Mubarak shifted their focus in 2011 to his regime and ultimately toppled him during the popular Arab uprisings. The revolts also led to the demise of autocratic rulers in Tunisia, Libya, and Yemen and sparked mass anti-government demonstrations elsewhere in the Middle East.

Arab Spring Uprisings. Credit: Mosa'ab Elshamy/Moment/Getty Images

To be sure, Egypt is worried that Israel’s destruction of Gaza is an effort to rid the Strip of its population by inducing Gazans to flee to Egypt. Officials in Cairo also fear that Hamas operatives could infiltrate the Sinai Peninsula where the military has been countering a low-level insurgency. Mr. Al-Sisi’s government is weary of Hamas because of its links to the Muslim Brotherhood.

Even so, many Egyptians resent the government’s close security ties with Israel and its support for a 17-year-long Israeli blockade of Gaza that has been tightened since the war.

Egyptian resentment is compounded by reports that corrupt Egyptian government officials linked to the country’s intelligence service and a well-connected businessman who hails from the Sinai charge up to US$7,500 per person for travel permits from Gaza to Egypt.

Mr. Al-Sahlamy shouted “God is Great” and denounced Mr. Al-Sisi as a “traitor and an agent” before being arrested by security forces. The Egyptian Network for Human Rights (ENHR) said Mr. Al-Sahlamy has not been heard from since.

The network quoted a friend of Mr. Al-Sahlamy as saying he was "breaking down" because of the war, which he described as “injustice.” Mr. Al-Sahlamy demanded that "the (Egyptian) borders (with Gaza) should be opened” to allow Gazans to escape the carnage, ENHR quoted the policeman’s friend as saying.

The IMF’s austerity program could push struggling Egyptians to a level of destitution not seen since the Egyptian bread riots of 1977, despite the government’s insistence that it will put in plkace social protection measures to shield the most vulnerable.

The rising cost of basic goods has deepened the hardships faced by middle sand lower-class Egyptians. They have suffered from price hikes since the government embarked on an ambitious reform program in 2016 to overhaul the battered economy. Nearly 30 per cent of Egyptians live in poverty, according to official figures.

For now, Egyptians like others elsewhere in the Arab world, fear that uprisings would only enhance the chaos already gripping their part of the world.

In Egypt’s case, “the question of Sisi’s future will arise when Egyptian citizens decide that they have nothing more to lose,” said Israeli journalist and Middle East analyst Zvi Bar’el.

The same is true for much of the Middle East beyond the Gulf with widespread public frustration at Arab states’ inability or unwillingness to alleviate Palestinian suffering as the joker in the pack.

Dr. James M. Dorsey is an Adjunct Senior Fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, and the author of the syndicated column and podcast, The Turbulent World with James M. Dorsey.